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The financing of city services in Southern Africa. Strategic planning & financing implementation. What does the city need? What can the city government provide? What is the financial capacity of the city government? How can additional resources can be obtained?

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Presentation Transcript
strategic planning financing implementation
Strategic planning & financing implementation
  • What does the city need?
  • What can the city government provide?
  • What is the financial capacity of the city government?
  • How can additional resources can be obtained?
    • How does investment connect to strategic decision-making?
    • In which areas are investments most frequent?
    • Are spending & debt management schemes part of the strategies?
    • Do cities go directly to the market to raise funding?
    • The most critical questions for city creditworthiness in Africa?
    • How can financial sustainability be ensured?

City treasurer`s perspective

Key questions

what does the city need

Maputo

What does the city need?
  • Built environment services
    • Roads and storm-water drainage
    • Refuse collection and disposal; street sweeping
    • Water & sanitation (sewerage)
    • Supply of electricity and gas
    • Traffic lights and street lights
    • Emergency services (ambulances, fire)
    • Cemeteries, parks and sports facilities
    • Public transport services
    • Bus and taxi ranks; markets
    • Town planning and building control
    • Municipal policing (by-law enforcement)
    • Environmental health services
  • Social services
    • Health care (primary/ clinics/ vaccinations etc)
    • Education (pre-, primary, secondary school)
    • Social welfare (centres for orphans etc)
    • Rental housing
slide6

Maseru

City government expenditure

City government staff

city government finance issues 1

Arusha

City government finance: Issues 1
  • Under-empowered & under-resourced
    • Trend has been to strip powers from city governments
    • Decentralisation by name, centralisation in practise
    • Limited built environment mandate
    • City governments operate at a small scale and spend very little
  • Limited decision-making authority
    • Senior staff appointments are often lengthy national processes
    • Tax and tariff increases; new valuation rolls; similarly
  • Limited infrastructure financing
    • If it happens on scale it is grant or donor funded
city government finance issues 2

Windhoek

City government finance: Issues 2
  • Under-performing revenue administration
  • Despite the overwhelming shortage of resources
  • Much of the tax base escapes being billed/ invoiced
  • Debtors balances outstanding are often high
  • Weak revenue relationship with residents and businesses
  • Significant human resource capacity constraints
  • Skills shortage is universally acknowledged as serious/critical (especially key technical areas)
  • Long period `acting’ appointments are universal
  • Yet little serious effort (possibility) to address the gap?
slide9

Port Louis

  • City financial strategies - 1
  • All city governments can improve their own financial performance
  • Through a `city financial strategy’
  • Often amounts to a `turnaround plan’
  • Internal reform initiatives
  • External reform initiatives
  • Objective: to put the city government onto a sound financial footing
  • systematic and determined plan & effort
  • must make operational surpluses, because the city government must invest
  • Requires city leadership with stature & maturity
  • Dedicated management team
  • Political & administrative insight & courage
  • Should be part of a city development strategy
city financial strategies 2

Nampula

City financial strategies - 2
  • Internal reform programme
  • Administrative, financial & revenue reforms
  • Often a serious change management exercise
  • Objectives and targets, `war room’, accountability for performance, etc
  • External reform programme
  • Improve effectiveness of relationship with national government
  • Address aspects of the inter-governmental fiscal relations
  • Customised capacity building for senior management
  • Targeted at programme objectives
  • Strategic planning & budgeting
  • Revenue administration (sometimes policy also)
  • Expenditure controls and accounting
  • Management capacity, accountability, performance
  • To obtain additional revenue powers
  • To obtain additional grant funds
  • To improve timeliness of grant payments
  • To obtain support for city strategy
approach to capacity building

Lilongwe

Approach to capacity building
  • Change management intervention aimed at senior city management
  • Specific operational as well as capacity-building objectives
  • Programme of workshops
  • Each building on the next
  • Each with substantial supporting work
  • Each requiring management team to take responsibility for tasks between workshops
  • Planned outcomes
  • Achievement of operational objectives
  • Enhancement of management team capacity
  • Strengthening of change momentum
slide12

Mbabane

  • Shadow credit assessment
slide13

Lusaka

  • Financial capacity assessment 1

Some capacity to finance city infrastructure

New valuation rolls in 2012 and 2017

Annual inflation of 7%

Tax rate increases of 10% in 2012 and 2017 only

Projected average annual cash flows : +US$ 0.7 m

slide14

Manzini

  • Financial capacity assessment 3

No capacity to finance city infrastructure

New valuation rolls in 2012 only

Annual inflation of 7%

Tax rate increases of 10% in 2012 only

Projected average annual cash flows : -US$ 0.9 m

conclusion

Gaborone

Conclusion
    • City governments are often a relatively weak and small actor provider in respect of city needs
      • National agencies are often the key actors for water, sanitation, electricity, major roads
    • Often impossible to get an overall quantified view of built environment needs
      • Such a view is not the priority of anyone
    • Investments should take place in term of a capital investment plan
      • drawn up through a process of strategic decision-making
  • Critical questions for city creditworthiness:
    • in Africa are governance and accountability; strategic direction; revenue administration, economic base
slide16

The financing of city services in Southern Africa

Roland Hunter

Hunter van Ryneveld (Pty) Ltd

roland@caj.co.za

25th May 2011